<PAGE> 1
MERCER INTERNATIONAL INC.
[Mercer Symbol]
NASDAQ - MERCS
EASDAQ - MERC
www.mercerinternational.com
<PAGE> 2
MERCER INTERNATIONAL LTD.
MILESTONES
1985 Present management acquired control
1988 Iron Ore royalty stream
1991 Property and Casualty Insurance
1993 Dresden Papier - 7 paper mills
1994 Rosenthal Sulphite Mill
1996 Financial Assets spun off to shareholders as MFC
Bancorp Ltd.
1998-9 Rosenthal conversion to 280,000 tpa Kraft Pulp
Conversion
<PAGE> 3
MERCER SHARE PRICE RELATIONSHIP TO WORLD NBSK PRICES 1993-2000
[Graph showing Mercer share price ($US) compared to pulp price per tonne
($US) from 1993 to 2000]
<PAGE> 4
PULP & PAPER OPERATIONS
[Map of Germany showing location of operations in Stendal, Rosenthal,
Fahrbrucke, Hainberg and Heidenau]
<PAGE> 5
OPERATIONS PROFILE
[Photograph of a digester at the Rosenthal mill]
<PAGE> 6
OPERATIONS PROFILE
<TABLE>
<CAPTION>
Current Status
<S> <C> <C>
Rosenthal Kraft Pulp 280,000 tpa Operating at Designed Capacity
Paper Operations 120,000 tpa Rationalization
Stendal Pulp Project 550,000 tpa 25% interest
(Greenfield)
Progressing on:
- Financing
- Permit amendments
- Other regulatory approvals
Option to 51% interest
</TABLE>
<PAGE> 7
ROSENTHAL OFFICIAL OPENING - JUNE 2000
[Photograph of employees and guests at the official opening of the
converted Rosenthal mill]
<PAGE> 8
ROSENTHAL START-UP PERFORMANCE
[Graph showing ZPR actual operating rates as a percentage of capacity by
month of full production after start-up versus reference mill operating
rates]
<PAGE> 9
ROSENTHAL
[Photograph of the Rosenthal mill]
<PAGE> 10
ORIGINAL ASSUMPTIONS FOR ROSENTHAL CONVERSION
<TABLE>
<CAPTION>
280,000 tpa Pulp Price (US$)
---------------------------------
520 600 700
---------------------------------
<S> <C> <C> <C>
(in 000's)
Revenue . . . . . . . . . . . . . . . . 145,600 168,000 196,000
Wood cost . . . . . . . . . . . . . . . 48,533 48,533 48,533
Chemical cost . . . . . . . . . . . . . 12,444 12,444 12,444
Other manufacturing cost. . . . . . . . 6,690 6,690 6,690
Total variable cost . . . . . . . . . . 67,667 67,667 67,667
Overhead (admin, maintenance, etc.) . . 21,436 21,436 21,436
Depreciation. . . . . . . . . . . . . . 25,323 25,323 25,323
Finance cost. . . . . . . . . . . . . . 14,108 14,108 14,108
</TABLE>
<PAGE> 11
COMPARISON WITH ORIGINAL ASSUMPTIONS FOR ROSENTHAL
<TABLE>
<CAPTION>
Original
Cost per ADMT Assumption Q2, 2000
<S> <C> <C>
Wood cost 173 161
Chemical cost 44 54
Energy 0 20
-----------------------------------
Total variable cost 217 235
Overhead, Labor, Maintenance 100 95
Finance 50 50
-----------------------------------
Cash cost inc. interest 367 380
Depreciation 90 95
-----------------------------------
Total cost 457 475
</TABLE>
<PAGE> 12
ROSENTHAL TRADE ADVANTAGES IN EUROPEAN MARKETS
[Photograph of bales of Rosenthal pulp]
<PAGE> 13
ROSENTHAL TRADE ADVANTAGES IN EUROPEAN MARKETS
- All Other Suppliers
- Freight costs + Delivery time
- North American Suppliers to Europe
- Lower Fibre Costs
- Language, Time Zones
- Smaller Delivery Lots
- Common Currency
- Local Customer Service
<PAGE> 14
FUTURE DEMAND FOR BSKP
- Since 1985 BSKP shipment have increased by 3% per annum
- Developing Countries are short of softwood tree species. More
dependant on market BSKP than mills in North America and Europe
- Demand for market BSKP projected to grow 3% per annum to year 2013,
an average increase of 650,000 tpa
- European demand will account for 35% of this growth, an average
increase of 240,000 tpa
- Most of the growth in demand for BSKP will be for woodfree and
mechanical printing papers and, to a lesser extent, cartonboards
Source NLK Associates - market study for Zellstoff Stendal Gmbh - Sept
2000
<PAGE> 15
STENDAL SITE
[Photograph of future site of Stendal mill]
<PAGE> 16
STENDAL PARTNERS
- Thyssen Rheinstahl Technik GmbH - A daughter company of ThyssenKrupp
Material and Services, a part of the ThyssenKrupp group with 180,000
employees and annual sales of $32 billion
- Tessag Industrieanlagen GmbH - Part of Tessag Technische System and
Services AG belonging to RWE group with 18,000 employees and annual
sales of $2.5 billion
- AIG Altmark Industrie AG - The original sponsor of the project
responsible for the site acquisition
- Mercer International Inc. - Shareholder and project sponsor since
December 1999. Projected Stendal pulp mill operator
<PAGE> 17
STENDAL PROJECT PULP QUALITY & MARKET PERSPECTIVES
- Lab & mill scale trials indicate softwood pulp quality of northern
character, comparable to typical southern Scandinavian pulp.
- Pulp quality expected to be complementary to Rosenthal Kraft, with
superior bulk and surface characteristics.
- Synergies with Rosenthal Kraft marketing & sales. Mercer would rank
9th place among world market BSKP producers.
<PAGE> 18
STENDAL PROJECT PULP QUALITY & MARKET PERSPECTIVES (CON'T)
- World demand for market BSKP is set to increase by annually 650,000
tons for the next 13 years, while capacity will increase by an average
of only 175,000 tons per annum.
- European paper industry is seeking an alternative supply for TCF market
BSKP.
- Little additional capacity is considered for 2002 - 2005, particularly
in the area of northern softwood pulp producers.
<PAGE> 19
CONFIRMED MARKET BSKP CAPACITY AFTER 1999
<TABLE>
<CAPTION>
Additional
Country Company Capacity (000 tpa) Date
<S> <C> <C> <C>
USA Fort James 25 Feb 2000
Sweden Stora Enso 35 April 2000
Canada Canfor -40 End 2000
Finland Stora Enso 60 May 2001
Norway Sodra Cell 40 2001
Sweden AssiDoman 15 2001
China Shandong Rizhao 20 Mid 2001
Finland Metsa-Botnia 190 Mid 2001
-------------------------------------------------------------------------
Total 345
</TABLE>
All NSBK except for Shandong Rizhao
<PAGE> 20
PROJECTS MOST LIKELY TO IMPACT SUPPLY/DEMAND BALANCE UP TO 2005
<TABLE>
<CAPTION>
Tonnes
Start up Hardwoods Softwoods
<S> <C> <C> <C> <C>
Brazil Aracruz Q3-2002 700,000
VCP Q1-2003 400,000
Cenibra Q4-2002 200,000
Chile CMPC Q4-2005 525,000
Arauco Q3-2005 500,000
USA Willamette Q4-2003 350,000
Asia April - Indonesia 2001-02 1,000,000
China - Thailand - Malaysia Q2-2005 N/A
Europe Basic Pulp Latvia Q3-2005 200,000 400,000
Mercer - Germany Q2-2003 550,000
---------- ----------
3,875,000 950,000
</TABLE>
<PAGE> 21
SUPPLY/DEMAND BALANCE 2001 - 2005 INCL. ANNOUNCED PROJECTS
[Graph showing available announce capacity, available speculative
capacity, capacity utilization and demand by percentage and million tonnes
per quarter, respectively, from 1996 to 2005]
Source NLK Associates - market study for Zellstoff Stendal Gmbh -
September 2000
<PAGE> 22
NBSK MARKET PULP PRICES
[Graph showing NBSK actual, real price in today's US$ and trend in US$ per
tonnes from 1970 to 2000]
<PAGE> 23
STENDAL PROJECT - PRE & POST FINANCIAL CLOSE SHAREHOLDER
[Pie charts showing Mercer International, TRT/ThyssenKrupp, Tessag INA and
AIG Altmark with 24.98%, 32.16%, 32.16% and 10.7%, respectively, pre-
financial close and showing Mercer International, TRT/ThyssenKrupp, Tessag
INA and AIG Altmark with 50.1%, 21.39%, 21.39% and 7.12%, respectively,
post-financial close]
<PAGE> 24
STENDAL PROJECT FINANCE
SOURCES OF FUNDS AT FINANCIAL CLOSE
Under the current plan, Mercer would receive 51% of economic and voting
rights of the project with a ? 40m equity contribution
[Pie chart showing limited recourse, guaranteed debt at Euro 520m,
grants/subsidies at Euro 150m, other equity partners/mezzanine at Euro
40m, Mercer equity contribution at Euro 40m and original consortium
contribution** at Euro 40m, with total funding at Euro 790m]
* Not finalised: Precise proportions may yet vary
** Thyssen Rheinstahl, Tessag, AIG Altmark Industrie AG
<PAGE> 25
STENDAL PULP MILL PROJECT KEY FEATURES
- Planned Mill capacity:
- 550,000 tpa Northern Bleached Softwood Kraft Pulp
- 1,700 tpd MCR
- ? 790 million preliminary capital cost
- Permit for Optional Expansion up to 610,000 tpa under Application
- Both ECF and TCF Fully Bleached Market Pulp (ISP 90 + & 88 respect.)
<PAGE> 26
STENDAL PULP MILL PROJECT KEY FEATURES (CONT'D)
- State-of-the-art Technology based upon Rosenthal Project Experience,
e.g. Low Chlorine Dioxide Charge ECF-bleaching. TCF-Bleaching based
on Ozone or PAA.
- Permit for 550,000 tpa TCF available, ECF-Permit under Application
- Full State Government Commitment & Support
<PAGE> 27
STENDAL WOOD SUPPLY
[Photograph of pulp log handler]
<PAGE> 28
GERMAN FORESTS
[Map of German forests, showing locations of Berlin, Stendal and
Rosenthal]
<PAGE> 29
STENDAL FOREST RESOURCES
[Map of Northeastern German forests showing location of Zellstoff Stendal
GmbH]
<PAGE> 30
STENDAL WOOD SUPPLY
<TABLE>
<CAPTION>
Total Available Supply Cubic meters
<S> <C>
Chips
Existing sawmills 850,000
New sawmills 350,000
Small suppliers 150,000
Beyond region 350,000
-----------
Total chips 1,700,000
Pulp logs 2,450,000
-----------
Potential Total Available 4,150,000
Stendal Requirements
Production 550,000 ADMT Pulp x 5.3m3 2,915,000
-----------
Excess Potential 1,235,000
</TABLE>
<PAGE> 31
MERCER TIMING ON ROSENTHAL
PROJECTED STENDAL START-UP
[Bar graph showing actual and forecast dollar price from 1973 to 2006 and
indicating timing of Rosenthal acquisition, Kraft mill start-up and
Stendal projected start-up]
Source NLK Associates - market study for Zellstoff Stendal Gmbh - Sept
2000
<PAGE> 32
SAFE HARBOR
This presentation includes statements which constitute forward looking
statements as provided for by the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These statements appear in a
number of places and include statements regarding the intent, belief, or
current expectations of future operating performance. These statements
involve known and unknown risks and uncertainties which may cause the
Company's actual results in future periods to differ materially from
forecasted results. For a review of these risk factors, please refer to
the company's filings with the SEC during the past 12 months.
